Post-Sequester Cuts, the ACA, and the Federal Government: Damning Effects on Medicaid

One week has passed since the infamous federal sequester deadline. Let’s re-assess: Does the Sequester Affect Medicaid?

Remember, according to the federal government, the Medicaid budget was exempt from the across the board slashes in budgets.

However, the following sequester cuts will have a direct effect on Medicaid:

  • $44 million cut from the Centers for Medicare and Medicaid Affordable Insurance Exchange grants;
  • $168 million cut from Substance Abuse and Mental Health Services Administration;
  • $75 million cut from the Aging and Disability Services Programs;
  • $17 million cut from Housing Opportunities for Persons with AIDS;
  • $19 million cut from Housing for the Elderly;
  • $57 million cut from the Health Care Fraud and Abuse Control;
  • $51 million cut from the Prevention and Public Health Fund; and
  • $27 million cut from the State Grants and Demonstrations.

Let’s analyze the first cut: $44 million from the Affordable Insurance Exchange.  The Affordable Insurance Exchange grants is an intregal part of the Affordable Care Act (ACA).  The ACA directs the U.S. Department of Health and Human Services (“HHS”) to provide states with funding to support planning, implementation and operation of state exchanges.  Already every state except Alaska received an initial allotment of up to $1 million in planning grants  in the fall of 2010. North Carolina already received $86,357,315.

As I am sure everyone is aware, NC has opted out of Medicaid expansion.  However, the ACA requires an insurance exchange program.  On February 12, 2012, Gov. McCrory announced NC’s intent to allow the federal government to operate the exchange.

So, now, our health care exchange program will be only as good as the federal government makes it, which is a scary prospect in my mind, especially in light of the near certain fact that the federal government is in such financial stress that it will not be able to uphold its end of the bargains under the ACA.  Already?

I wonder if the states accepting the federal dollars for Medicaid expansion are re-thinking those decisions.

Last week, Charles P. Blahous, III, who has served as a public trustee for Social Security and Medicare since 2009, said there was a “near certainty” that the federal government would not provide the full level of Medicaid funding now scheduled under law.

Blahous  also stated that “to return the federal budget to sustainable historical norms in the absence of any cuts in the growth of Medicaid and the new health exchanges would require all other non- interest spending to be cut by nearly one-quarter by 2037 relative to projected levels, and by roughly 15 percent relative to current levels in relation to GDP.”

And: “This is probably unrealistic.”

Despite the budget cuts due to the sequester, the federal government is STILL in severe financial stress.

So as to, the ultimate question posed in the beginning: “Does the Sequester Affect Medicaid?”

The answer: A resounding yes.

Summary: (Please note: The word “impact” should carry a pejorative connotation. When reading, feel free to add in “negatively” each time you read “impact.”)

The sequester impacts health care. Medicaid is health care.  The sequester impacts Medicaid.

The sequester impacts the health care exchange program. The federal government is in financial stress. The federal government will control NC’s health care exchange. NC’s health care exchange will be in financial stress.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on March 12, 2013, in Affordable Care Act, Congress, Federal Law, Legislation, Medicaid, Medicaid Costs, Medicaid Reform, NC DHHS, North Carolina, Obamacare, Sequester and tagged , , , , , , , , . Bookmark the permalink. 2 Comments.

  1. The Administration has designed the implementation of the sequester to maximize the pain felt by all of the general public. The cuts you listed might have been the only ways to spread the pain to a group which was supposed to have been protected. The intent is to demonstrate that life as we know it cannot go on unless government funding is increased, because all good things in life come from government.

  2. Despite the fact that the federal government lacks the funds to fund the funding.

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